Will Cranston’s mayor cut jobs to close a $10M gap?

Cranston is facing a major financial crisis. Ten million in the red for the current fiscal year, the city is being forced to lay off employees and offer buyouts in a desperate effort to save money. The dire fiscal situation prompted Mayor Ken Hopkins to ask for an extra two weeks to prepare his budget proposal, which he’s expected to present to the city council on Wednesday.

WPRI investigative reporter Eli Sherman has been following Cranston’s budget woes for several months. He joined Ocean State Media morning host Luis Hernandez to talk about where the city goes from here.

Eli Sherman: We’re talking about a projected $10 million deficit in the current operating budget… I mean, the numbers that we can see right now in terms of overspending that’s happening in the budget in the current fiscal year; they’re overspending in their fire department, they’re overspending in their police department. The root cause of it is bad budgeting. I don’t know if there’s an easier way to say it, but for a long time, they were sort of overestimating their revenues – how much money they were going to bring in – [and] underestimating how much they were going to spend.

The former finance director for the city is out and they’ve brought back in Bob Strom, who was the finance director for a long time under former Mayor Allan Fung and also at the beginning of Ken Hopkins’ administration. So they’re hopeful that with some “old new blood” they can get a better handle on their finances.

Sherman: When it really became clear that they needed to make some major changes in their budget to try and balance it out, they offered all city employees buyouts. It’s unclear at this point how many of those employees took the buyouts, but whatever that number is, which we’ll find out when he enrolls his budget later tonight, it’s going to answer that question of how many layoffs there might need to be.

Without reducing staff, you have to make major cuts in programming. The school side is already preparing for layoffs, which is something that they’ve had to do for years now because they’re not getting as much money from the city as they are from state aid increases. And so they’ve been experiencing reductions; I think 90 staff members over the last three years. It looks like that trend will have to continue as well.

Sherman: There are these requirements from the state to report up to the state your spending projections through the year. And the reason that’s the rule is so that state officials can keep track to make sure that you don’t fall into this situation. Cranston was not doing that. That was something that they were chastised by the state auditor general. Those are early signs that you might be running into trouble. They didn’t make those reports. Now they’re in this situation. Hindsight being 20/20, it might have been caught earlier and they might have been able to make some changes.

Sherman: You’ve either got to bring in more money or you’ve got to spend less, right? It’s not that complicated. Budgets are complicated, but that is really the root of what you can do, the levers you can pull. Every city and town cannot exceed its annual tax levy by 4% without legislative approval. And we see, periodically, cities and towns come to the legislature every year saying, “Look, we need to raise more money than the 4%. So we are going to apply to go over that cap.”

Now, city officials, when I first started reporting on this back in February, told me at the time there are no plans to do that in Cranston. And during the Hopkins administration, they have kept tax rates relatively low, but with $10 million, you either have to make massive cuts to programming [or] massive cuts in staff to not go over that 4% cap. It’s just a math problem. So I think that those discussions are very much being had by municipal leaders right now and whether or not they’ll have to go over that cap like we’ve seen in recent years in places like Providence.

Sherman: I think that taxpayers should be paying very close attention to their budgets in whatever city or town they live in right now because what has happened over the last five, six years is that there was such a massive influx of federal aid that came in from the pandemic-related packages. Cities and towns got a lot of that money. And at the time, responsible budget officials would tell you, “You cannot spend this for recurring costs. You cannot spend this on things like staff. You should be using this money to buy buildings, to buy assets, things that are a one-time expense.” But a lot of cities and towns actually ended up using that money for recurring costs and now that money has dried up. It wasn’t infinite. So now you see city officials having costs that are annual and not having the money behind it to pay for them. It’s coming back to bite a lot of cities and towns.